MAR-2-05 CO:R:C:V 733563 NL
M. Henri St-Georges
Director of Administrative Services
Cafe Quartier
1360 Rue Provinciale
Quebec, QC, Canada G1N4A2
RE: HQ 554971 revoked. Country of Origin Marking; Roasting and
Blending of Coffee; Substantial Transformation
Dear Mr. St-Georges:
This is in response to your letter of May 28, 1990, in which
you request clarification of U.S. Customs Service rulings with
respect to the country of origin marking of roasted and blended
coffees.
FACTS:
Headquarters Ruling HQ 554971 (December 1, 1988), held that
the sorting, grading, blending, and roasting of imported coffee
beans does not effect a substantial transformation so as to
qualify the processed coffee as a product of the U.S. Virgin
Islands eligible for free entry into the U.S. under general
headnote 3(a), Tariff Schedules of the United States (now General
Note 3(a)(iv), Harmonized Tariff Schedule of the United States).
This ruling is in conflict with previous rulings which have held
that roasting and blending, or roasting alone, effects a
substantial transformation in coffee beans. See, e.g., HQ
070395 (June 6, 1983); HQ 722360 (June 6, 1984); HQ 722980
(October 17, 1983); HQ 725641 (July 25, 1984). HQ 554971 did not
formally modify or revoke these previous rulings, or refer to
them.
ISSUE:
Is the roasting of coffee beans a substantial
transformation for country of origin marking and other purposes?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
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article (or container) will permit, in such a manner as to
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article. The purpose of the
marking statute is to permit the ultimate purchaser to choose to
buy or not buy on the basis of where the goods were produced.
United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104
(1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. As provided at 19 CFR 134.1(b), the "country of
origin" of an article is the country in which it was
manufactured, produced, or grown. The country of origin may
change if, in another country, further work or material is added
which effects a substantial transformation in the article. A
substantial transformation is said to occur if within the
principle of United States v. Gibson-Thomsen Co. Inc., 27
C.C.P.A. 267 (C.A.D. 98)(1940), the processing results in an
article having a different name, character, or use.
In the case of coffee, the earlier rulings cited above have
concluded that roasting, or roasting and blending, of coffee is
sufficient to change its character and use and thus effect a
substantial transformation. Ruling HQ 554971, applying more
recent precedents with respect to substantial transformation,
concluded the opposite. Specifically, HQ 554971 relied upon
T.D. 85-158, in which Customs determined that the roasting of
green pistachio nuts does not effect a substantial transformation
so as to change their country of origin. The ruling also relied
upon HQ 554739 (October 30, 1987), which concluded that the
process of decaffeination does not substantially transform green
coffee beans. It should also be noted that in National Juice
Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986), the
Court of International Trade upheld Customs determination that
orange juice imported as manufacturing concentrate is not
substantially transformed by conversion into frozen concentrated
orange juice or reconstituted orange juice.
HQ 554971 relied upon precedents which, in our opinion,
supported the conclusion reached. However, because that ruling
apparently overlooked earlier rulings, i.e., that roasting, or
roasting and blending of coffee effects a substantial
transformation and thus changes a coffee's country of origin,
Customs now believes that HQ 554971 should be revoked in light
of earlier rulings.
It is noted, however, that the earlier rulings on coffee may
be no longer consistent with rulings of Customs and decisions of
the courts applying the broad principles of substantial
transformation to other food products. See, e.g., National
Juice Products, T.D. 85-158, and rulings regarding broccoli,
honey, sugar, shrimp, and other foods, all concluding that no
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substantial transformation results from processes such as
cooking, refining, and blending. Customs may in the near future
determine that it is appropriate to reconsider its earlier
rulings finding that roasting coffee effects a substantial
transformation.
HOLDING:
Until further notice, the roasting or roasting and blending
of coffee is regarded by Customs as effecting a substantial
transformation. Accordingly, HQ 554971 is hereby revoked.
Sincerely,
John Durant, Director,
Commercial Rulings Division